COMMISSIONER OF INCOME-TAX vs. SUVARNA PACKAGING PVT.LTD.

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ITR/296/1994HC GujaratGJHC24020372199403 February 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE KUNDAN SINGH2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The Tribunal was held to be right in its conclusion. The reasoning followed the ratio of the Supreme Court's decision in Allied Motors (P) Ltd. v. C.I.T. (224 ITR 677) and this Court's decision in C.I.T. v. M/s. Chandulal Venichand & others (209 ITR 7). The principle established is that Section 43B, which disallows deductions for certain expenses unless actually paid, does not apply to statutory liabilities like sales tax if paid within the extended period allowed for filing the income-tax return under Section 139(1). The operative direction was to answer the reference in favour of the assessee. No issue was left undecided.

What were the facts?

The Income-tax Appellate Tribunal (ITAT), Ahmedabad, referred a question of law to the High Court of Gujarat at Ahmedabad concerning the applicability of Section 43B of the Income-tax Act, 1961. The specific issue involved unpaid sales tax liability pertaining to the last quarter of the financial year. The ITAT had held that if this liability was paid within the time stipulated for filing the return under Section 139(1), Section 43B would not apply. The High Court noted that this case had identical facts and involved the same issue as another reference, Income-tax Reference No. 295/94, which was decided concurrently.

What were the issues?

1. Whether, as a matter of law and fact, the Appellate Tribunal was correct in holding that if the unpaid sales tax liability pertaining to the last quarter is paid within the time stipulated for filing of the return under Section 139(1), the provisions of Section 43B cannot be applicable? Assessee's Contention: The assessee, through its representative, implicitly supported the ITAT's finding. The ITAT's decision, which the High Court is reviewing, held that Section 43B would not apply if the sales tax liability for the last quarter was paid by the due date of the return under Section 139(1). Revenue's Contention: The Revenue, represented by Mr. Manish R. Bhatt, challenged the ITAT's decision. The question referred to the High Court indicates the Revenue's disagreement with the Tribunal's interpretation of Section 43B's applicability in this scenario.

Which sections of the Income-tax Act were involved?

Section 43B,Section 139(1),Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 296 of 1994

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge?

-------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus SUVARNA PACKAGING PVT.LTD. -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner MR NR DIVETIA for Respondent No. 1 --------------------------------------------------------------

CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH Date of decision: 03/02/98

ORAL JUDGEMENT Per: R.K. Abichandani, J.

1.

The Income-tax Appellate Tribunal, Ahmedabad has referred the following question for the opinion of this Court under section 256(1) of the Income-tax Act, 1961. "Whether, the Appellate Tribunal is right in law and on facts in holding that if the unpaid sales tax liability pertaining to the last quarter is paid within the time stipulated for filing of return under section 139(1) of the provisions of section 43B cannot be applicable ?"

2.

Identical question in similar factual background came up for consideration before us in Income-tax Reference No. 295/94 which is decided by us today. Since the facts are similar and point involved is identical, we do not reproduce the facts in this order from the record of this Reference. In answering the identical question in the said matter we have followed the ratio of the decision of the Supreme Court in Allied Motors (P) Ltd. v. C.I.T. reported in 224 ITR P. 677 and the decision of this Court in the case of C.I.T. v. M/s. Chandulal Venichand & others, reported in 209 ITR P.

7.

For the reasons which are given by us in deciding the question involved in Income-tax Reference No. 295/94, we are of the view that the Tribunal was right in holding that if the unpaid sales tax liability pertaining to the last quarter is paid within the time stipulated for filing of return under section 139(1), the provisions of section 43B cannot be applicable. The question referred to us is, therefore, answered in the affirmative against the Revenue and in favour of the assessee. The Reference stands disposed off accordingly with no order as to costs.

[R.K. ABICHANDANI, J.]

[KUNDAN SINGH, J.] ***** Amp/-

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